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Does anyone have the report? Cramer just said he can’t dismiss the report. Thanks.

Keefe Bruyette & Woods Downgrades Berkshire Hathaway to Underperform From Market Perform, Adjusts PT to $700,000 From $735,000
MT NEWSWIRES 2:26 AM ET 10/27/2025
Symbol Last Price Change
BRK/A 738000up -500 (-0.0677%)
QUOTES AS OF 09:34:46 AM ET 10/27/2025
05:26 AM EDT, 10/27/2025 (MT Newswires) -- Berkshire Hathaway(BRK/A) has an average rating of hold and mean price target of $769,065.44, according to analysts polled by FactSet.

Expecting more of this? Performance chasing?

Warren Buffett’s Berkshire is lagging the S&P 500 by the largest gap so far this year
https://www.cnbc.com/2025/10/25/buffetts-berkshire...

What we need a proper CEO performance plan...$100k just isn't doing it anymore. Needs * a lot * more zeros.

" What we need a proper CEO performance plan...$100k just isn't doing it anymore. Needs * a lot * more zeros."

You are kidding right?

I am doing some trimming on my SPY/QQQE/RSP index funds, raising cash and potentially thinking about adding to BRK. I sold some of my BRK.B at $525 earlier this year, so buying that back below $490 would be a nice boost.

tecmo
...

" What we need a proper CEO performance plan...$100k just isn't doing it anymore. Needs * a lot * more zeros."

You are kidding right?

Yes. Was watching that South African lady explain why they must give Elon so much, otherwise he just won't be motivated, poor thing.

I see Berkshire down 1% while SPY up nearly 1%.

" I see Berkshire down 1% while SPY up nearly 1%."


Is it fair to say we are currently suffering from a lack of demand?

I was able to read this Barron's piece:

Berkshire Stock Falls Nearly 1%. It Got a Rare Sell Recommendation.
https://www.barrons.com/articles/berkshire-stock-p...

“Many things are moving in the wrong direction,” Shields wrote.

“We believe GEICO’s likely underwriting margin peak, declining property catastrophe reinsurance rates, lower short-term interest rates, tariff-related pressure on the rails, and the risk of fading alternative energy tax credits will drive underperformance over the next 12 months,” he wrote.

Geico, Berkshire’s big auto insurance unit, has had stellar underwriting profit margins in recent quarters of more than 15%, against a more normal level of closer to 5%.

Shields slightly raised his 2025 earnings estimate on the Class A shares to $31,750 from $31,725 while reducing his 2026 and 2027 estimates to $31,750 and $33,350, respectively, from $32,430 and $34,430.

He came up with a sum-of-the-parts valuation on Berkshire of around $700,000 a share.

Berkshire’s big property and casualty insurance business is facing a good news/bad news situation as light hurricane activity this year (the season ends in November) is boosting near-term results but pressuring property catastrophe reinsurance pricing.

He also cited falling short-term rates, which should damp the investment income on Berkshire’s more than $300 billion in cash and equivalents that are invested mostly in U.S. Treasury bills.

Shields also cited Trump’s One Big Beautiful Bill, which accelerates the phase out of tax credits for clean energy projects, “potentially undermining Berkshire Hathaway Energy’s future renewable energy projects’ net profits.

Another sticking point for Shields: The insurance group’s “historically unique succession risk.”

Shields is a veteran insurance analyst and is among the relatively few analysts covering Berkshire. The company’s complexity is daunting for many analysts, and Berkshire doesn’t make things easier for analysts because it doesn’t meet with them.

Of seven analysts tracked by FactSet, four rate Berkshire’s Class A shares Hold and two rate them Buy. Shields is the only analyst who has a Sell rating.

Barron’s named Berkshire Hathaway a stock pick in July, saying that investors could follow the billionaire’s own advice and buy when others are fearful.

All seems pretty reasonable, huh?

My own sum-of-the-parts estimate comes up with a lower number.

I also read the Barron's post via Apple News. If you have an Apple device, for $14.06 a month you can read most of the Barron's articles without a firewall. And access a huge number of newspapers - including the WSJ - without a subscription. It is my opening read each morning. Being also a college football fan, I read the newspapers from the cities that won, and the cities that lost. A real bargain in my judgment.

I find no disagreement with the Barron's article. It reflects my own feelings about where BRK stands now.

Let me refer to LongTermBRK's comments on BRK. We've known each other for a long time, dating back to the old AOL board. He knows Buffett directly, while I only know close friends of Buffett. And he's owned BRK a lot longer than I have. So I listen to his views about BRK seriously. He's been right for a long time, and I've profited by following his footsteps.

Where we may differ is that if the past cycle timings stills holds for the future. History says business cycles happen. But the timings may differ in ups and downs. It is the average across the cycle that determines the best strategy. Do the downside opportunities offset the time not invested in the upturns?

For background, I'm a very long term shareholder in Exxon. Exxon accepts that it is a "price taker". It cannot control the price of oil. It must function within prices set by the market - particularly now OPEC+. BRK is basically the same way. It generates cash, but it doesn't make the opportunities. It must wait until the market offers opportunities for investing the cash. BRK is a "market taker" - basically the same.

That's unlike firms like private equities and their kin. They can buy companies in trouble, fix them, and then resell them at a profit. Wash and repeat. BRK can buy undervalued companies, but they don't "fiX" them. They buy for the long term, and expect they will return to normal, or better, values. They don't expect to "fix" them and resell. That's not one of their core capabilities. BRK's real strength is to have capital available when others need it. And their strategy is to wait, patiently beyond most, for that opportunity to happen.

The track record says that strategy has worked. BRK has basically tracked, plus-or-minus a little, the market since the huge mistake in acquiring Gen Re for stock transformed the company. As the stock issued for Gen Re has grown in value, and Gen Re has largely stagnated, those excess shares have been a growing drag on BRK. That was a transition event, and it has only grown worse over the years and decades. As Buffett has stated, we gave up much more than we received. The fixed income investments that we acquired for overvalued BRK stock were never invested. All subsequent acquisitions were funded by cash flows. We gave up 20+ percent of BRK for a commodity insurance business in trouble.

That's then, this is now. Now we once again have built large cash reserves. And we wait for the opportunity to deploy them. Jim pointed out in a recent post that how well that works depends upon how much opportunity is lost waiting depending upon how much is gained during downturns. When the size of BRK increases, the bigger the opportunity must be to offset the years lost in waiting. At circa $1 trillion in current assets, how many of those opportunities - of sufficient size - will happen?

That, to me, is the core issue looking forward.

The Barron's article points out that the existing businesses face headwinds in terms of growth. Their alternate opportunity may be to hold on to current markets while improving profits by reducing costs. That seems to be the current trend in businesses - with AI expecting improved efficiencies by reducing manpower. Will BRK join the game?

I'm not as sanguine as LongTermBRK. I'm standing pat because of the capital gains implications of trading. But I've reduced expectations. Do I hear Charlie's words in the background? Be content with what you've got. Worry more about avoiding permanent loss of capital than beating the market.

All seems pretty reasonable, huh?

Totally. For a few years I've looked at Berkshire as the ballast of my portfolio, not the engine room. I'm sure most of us have. The rest of the market is at stratospheric levels with paper thin margins...and there is one guy sitting on a cash horde that would make Elon Musk blush. Be fearful when others are greedy. Something like that.

Is it fair to say we are currently suffering from a lack of demand?

Sure. It does feel a lot like 1999 and early 2000.

And just like back then, I'm quite certain Berkshire management won't be doing anything to prop up the stock price.

" And just like back then, I'm quite certain Berkshire management won't be doing anything to prop up the stock price."

Good morning, That's priceless. Have you ever tried to convince a trumper that he isn't pitching a perfect game?

If you refuse to acknowledge the past there isn't much chance I can convince you of the future.

We shall see.

Good morning, That's priceless. Have you ever tried to convince a trumper that he isn't pitching a perfect game?

If you refuse to acknowledge the past there isn't much chance I can convince you of the future.

We shall see.

When has Berkshire management attempted to prop up the stock price?

" When has Berkshire management attempted to prop up the stock price?"

With all due respect, I just told you I would rather try to convince a loyal trumper that he makes way too many unforced errors.

I'll close with this, msft, goog, aapl, meta, etc better ALL cancel their div before the stocks go to the pink sheets!

Have a grand day, off to the park.

Again, I appreciate the kind words from TexIrish. I may have owned the stock longer but he’s a little older —and a lot wiser. And I’ll concede there are personal biases in my relationships in this topic.

I guess where I differ is—I see opportunity where you’ve clearly and eloquently identified risk. We concur, I think, at the end of the day this is a collection of operating companies. THAT is what will move the needle, likely increasing so, going forward.

So we have a group of large op cos I believe we all conceed and the market overwhelming concurs (and that is SIGNIFICANT in this discussion) —underperforming collectively. We also sit on $340 Billion cash (maybe 28% of the company).

Key point: The marketplace..and posters here..value Berkshire on PRESENT cash flows, earnings, and Book. It values its “loved” stocks on future hope. It values Berkshire only on its underinvested present.

We’ve seen strong progress in fixing GEICO & its technology issues…it’s been a remarkable turnaround . We’ve seen incremental progress at Burlington Northern. We have other subs that just need TLC and a little macro tail wind. We have precisely the guy for THAT an OPERATING GUY who logically will——you fear culturally/I love fundamentally —be more “hands on” at the major op cos. Right guy..right time.

So, with all due respect, I see a business valuation and census analysis that reflects most of your concerns. There’s a lot to worry about. Those concerns are real and you are spot on and thorough in your analysis. Agree!

But I try to skate to where I think the puck is going…am I too optimistic thinking:

a.) some of these operating companies will do better..1 or 2 a lot better…over time. They’re collectively solid businesses in need of tune-ups. And yes there are headwinds on the regulatory and competitive fronts.

b.) more significantly we are valuing a business that has probably $250 Billion (accessible immediately) and growing each week to put to work. I’m not a wild optimist I think saying 1/4 to 1/3 company can’t be invested at better than 4%. Going forward. I suggest it will be deployed at rates comfortably topping that modest bar. And that’s NOT in this stock.

So..maybe it’s sanguine for me to conclude: op cos won’t be as bad, cash will some day be put to work, and culture will not be destroyed.

But that’s all you need for this to WORK. We love 2 foot high hurdles to clear in the jump competition and we LOVE low expectations. This is Buffett text book and I love the risk/reward here. It’s modestly attractive at PRESENT cash flows and PRESENT P/B. What if we put some money to work or fix a couple things??

This has been fun. And you know I respect and admire you as much as anyone. And the Apple News tip is great, too. Thanks for your shared wisdom. As always. And Exxon is on my radar screen! :)

"When has Berkshire management attempted to prop up the stock price?"

With all due respect, I just told you I would rather try to convince a loyal trumper that he makes way too many unforced errors.

You know, when I started engaging with you recently, I did think it would probably be a total waste of time, and it has, indeed, proven to be the case.

Moral of the story? Don't feed the trolls.

Have a nice day!

How said it is, when somebody brings up their favorite hobby-horse in EVERY conversation regardless of how off topic it is.

Person 1: "Where should we go for lunch?"
Person 2: "I hate xyz!!!"

" Moral of the story? Don't feed the trolls."

Thank you for holding my hand, I would never get it right without you and the loyalists.


WE shall see.

I’ve been thinking a lot about what you’ve pointed out, Tex, and there is wisdom and you’ve cited real causes for concern. Berkshire’s flexibility is just one of the issues here as well as many operational challenges you’ve outlined, successor concerns, etc..

But sometimes I wonder..and I ask myself this all the time…is it MY outlook that’s less certain or rosy than the business I own? Is it MY timetable that,understandably , takes precedent..or worse, darkens my outlook or analysis?

I don’t mean to go all Dr. Phil on you lol…but when we own a disproportionate amount of OUR net worth in 1 company along with OUR life expectancies….isn’t it more an issue about US—rather than Berkshire?

We have a company with Fort Knox balance sheet, the most capitalized business in US history with the largest margin of safety perhaps anywhere…, but the real RISK as you point out, of serious INTERMEDIATE fumbles or underperformance for several years. Berkshire is constructed to handle major miscues and investment blunders. That’s why it’s so frustrating in risk-on markets focused not on Fort Knox and risk but on rosy future dreams. Berkshire’s long term investment timetables have not changed-but OUR life timetables have shrunk a lot. That is US —not them.

Serious problems at major operating companies ARE happening and WILL occur in the rosiest of outlooks. Even with big holdings this is part of the game contextually. In stock picking, 10 stocks have provided most of the gain of Warren’s 400+ lifetime stock picks. Mediocrity will absolutely thrive most of the time—in the best market crushing portfolios. 2 Home Runs in 10 ABs get you to Cooperstown. A reminder of the futility of people who piggy back Buffett’s picks. Context is everything.


30 years ago we’d have said fine—we can live with that. But it’s OUR lack of diversification, OUR personal lifespans, and OUR Estate plans that have us worried. Berkshire will find an elephant —but maybe not in OUR lifetime. And that may work out marvelously—for the company. The bigger timeline issue there may be OUR mortality over Berkshire’s elephant hunting timetable. AS OUR clocks tick,Berkshire at our present holdings level, becomes increasingly riskier. So, ironically, I’m in agreement about we what WE need to do and what WE probably need to be concerned about. Berkshires timetables have not changed. But ours have. Would Warren have better advice for us—than we have for him?

FWIW I don’t buy the size as an obstacle argument at all. We are capitalized a third of a few single business…and WE own 100+ of them. Find an Apple every dozen years and you’re fine. Market Cap is no excuse. At Nvidia, Microsoft, Apple cap—sure..big worry but not us. The Apple holding contributed more to Berkshire than I’d ever imagined. Get the guts to go all-in when only rarely certain and you can move the needle easily at our market cap.

Look, I may be entirely wrong. My dream is to talk with the smartest person in the world who thinks everything I believe is rubbish. I want to chat with that person. Jim usually steps up in that role lol (not the rubbish part but the smart part)…

Then GenRe deal was a disaster for Berkshire's growth rate but I think you're missing the main reason. In the intervening 25 years, Buffett has never invested the money. The cash pile has grown and grown. Any comparison to the "past" made by those who think the last 25 years are the past (not you) still don't understand this. When Buffett traded away 20% of Berkshire at the peak of the Great Bubble, it was a decent move. But, to make it work, he needed to put the money to work. I've seen you make the point that there's no way the GenRe deal could have been successful. But, I think you left out the following possibility. Run your numbers with the assumption that, say, by 2005, Buffett had put all the excess cash from GenRe simply in the S&P 500 index (I recall some saying the S&P was over-valued back then. But, the math says over-valuations only provide intermittent opportunities. I was talking to someone back then and pointed this out. He's not the brightest guy, it turns out, and when he realizes that he, gets aggressive. You know the type. He said: "I don't own Berkshire for it to invest in the index." Well, here we are 20 years later, and the cash has just piled up and piled up and for a lot of that time, the interest on the cash was less than the inflation rate. It has been an unmitigated "disaster" if looked at rationally.

If you've been hunting for elephants for 25 years and never bagged one, perhaps it's time to turn in your weapon and ammo. If, instead, you keep piling up more ammo, hundreds of billions of rounds, as you finally give up the hunt and hand it off to your protege, I think that says more about you than the rest of those watching from the kopjes.

The reason why Berkshire, pre-GenRe, performed so much better was because the float was invested in businesses and stocks, and provided enormous leverage on Buffett's stock picks. Post GenRe he's done the opposite and no matter how much time has gone by, the goalposts were shifted. This was about Buffett and not "us". I've never fully figured it out. And, psychoanalysis of the situation is likely useless. I'd guess, for a punt, that he has gotten more pleasure out of not being questioned -- I recall his recounting that the dividend proposal was shot down. He was very self-satisfied in that Sally Field academy-award-acceptance-speech-kind-of-way. She didn't really say it this way but it fits that moment: "You like me, you really like me."

Yes, Warren, we did and do like you. You are the best and we always liked you and always will. But, the same rules you used in the letters from the old days still apply. If Berkshire cannot beat the index, there's no great managerial performance happening. It is what it is. The counterpoint seems to be: "Well, but it is safer." How can that be? How can Berkshire be safer than owning the S&P500 index -- crucially, over the long-term -- if it is a component of the index. I'd love to see someone argue this. The safest bomb shelter is useless if the earth is destroyed. Berkshire cannot survive if the rest of the S&P 500 index goes to zero.

If I was lucky enough to live in a no tax world, the decision here is easy. All this said, perhaps just now isn't the moment. This downgrade is probably creating an opportunity (intentionally) for the smart money to move out of some of the high-flyers and into the post-Buffett Berkshire. And, Abel gets 5 years to solve the issue. He certainly won't be praised for running the cash hoard to $500 billion. And, if Buffett (and Munger) couldn't ever find an elephant, how will he. Tremendous pressure and not much upside here. It will be interesting.

Some thoughts on the KBW report.

I took the time to reread the 2024 annual letter last night. I also update my 5 grove model.

In the letter Buffet was a little more direct than I remember on what to think of the " large cash position" in relationship to the other parts of BRK.

To summarize what I think are key points, especially when it comes to thinking about the value of BRK.

The partially owned (marketable securities) and cash values are readily available. As of QE June, $280 MS, $350 cash. May be off a little. So over $600 BB.

In the typical Buffet characterization, Buffet stated that the owned businesses are worth FAR more than the marketable securities. Consistent with his previous statements that the owned business were worth far more than BV.

Of course, what is the definition of far more?

Also as I sit, marketable securities were likely around $300 BB as of March 31, higher now. So I think it is plausible that Buffets view of the owned businesses is likely at least 130% of the value of the marketable securities as of Q1 2025. So let's say $400 BB+.

So without getting too scientific it is not to hard to make a case for a overall valuation of $1.0 Trillion.

I will add a few more thoughts. As of today BV is likely north of $325 va $309 as of June 30.

Now to attempt to be a little more precise in terms of valuation I have updated my 5 groves.

1) Operations of non insurance businesses. YTD June, earnings are up 9% over 2024. You may characterize them as poor performers, but they are still showing solid YTD improvement. This puts them on pace for about $24 BB in 2025. What is that worth? I think in today's world of valuation around $500 BB. This would imply a P/E of around 20. You may disagree. Remember there is no insurance in this number.

2) Marketable securities. As of QE June, $268 BB less $40 BB est taxes or net $228 BB. However since then they are up about $30 BB AT. So current net value is about $258 BB. Not much to disagree with here. Of course positions may have been changed which will have an impact. I assume no Oxy or KHC are in the marketable securities numbers (can anyone confirm this)

3) Partially owned business plus preferreds? This one I am still try to make sure I don't have any double counts. However, if you assume current market values for all 4 of these (OXY, KHC, Oxy preferred, Berkadia). All in I get $30 BB. Kind of a rounding error.

4) Cash. I have $374 BB as of QE June, plus $11 BB QTD retained earnings. So $385 BB.

5) Underwriting profit. Buffet specifically mentions in the letter this year? that this has averaged 3.3% after tax of sales over the past 20 year. I am sure he is correct, but I get a number closer to 4%. However lets assume 3.3% on current sales of $88 BB. Since this is reoccurring I use a P/E of 12 (industry average for a collection of insurance companies, well below the market multiple) which gets me to a value of about $37 BB.

This collection of numbers gives me a valuation well north of $1.0.

I would add that as of today BV is back below 1.5.

Please offer your thoughts so I can make adjustments.

reference to previous message.

1) Mentioned insurance companies which typically have lower P/E's
2)
3)
4)$374 BB already includes the extra cash from Q3, and last 27 days on top of that. So $374 would be the more accurate number not $384.

Let me clean my thoughts up a little bit.

a) The KBW report brought issues related to auto insurance margins, falling ST treasury yields, or poor performing businesses vs peers. BRK recent underwriting profits have been significantly above long term trends. However, only an idiot would use recent performance to value BRK. 2024 margins were 10%+. I used 3.3% for my valuation. I would add that 2025 may be near or at record levels.

b) KBW projected lower rates on ST treasuries. The 5 grove model is unaffected by the current level of rates. Presumably as well, if rates fall so should required rates of return. Where did KBW incorporate this?

c) Whether the businesses have been performing poorly or not, they are improving. The market is more interested in where you are going. 9% YTD YOY performance sounds pretty good to me.

d) "Despite what some commentators currently view as an extraordinary cash position at Berkshire, the great majority of your money remains in equities. That preference won’t change. While our ownership in marketable equities moved downward last year from $354 billion to
$272 billion, the value of our non-quoted controlled equities increased somewhat and remains FAR greater than the value of the marketable portfolio."
Similar to Buffet claims that IV is far greater than BV. (I misspoke on this before).

So just to summarize. Short form valuation. Marketable securities net of tax $260 BB. Cash $375 BB. So if non insurance businesses are worth $380+ BB then BRK is worth a $.1 trillion. I assume that non insurance business may be worth at least $100 BB more than $380 BB .

Of course with 5 groves I get a value closer to $540 per share. See my previous post.

" Well, here we are 20 years later, and the cash has just piled up and piled up and for a lot of that time, the interest on the cash was less than the inflation rate. It has been an unmitigated "disaster" if looked at rationally."


Thanks for sharing your thoughts but if you came here for rational thinking, you came to the wrong town!

AAAAAAAAAmen!

TSLA mmarket cap is at $1.5T and AMZN is at $2.45T

Also, Bitcoin to USD is $110k

Meanwhile, keep upvoting each other about how market is overvalued, talk about dotcom/CSCO and hope for doomsday scenario.

" Meanwhile, keep upvoting each other about how market is overvalued, talk about dotcom/CSCO and hope for doomsday scenario."

dividends20, let's make it old timers day. Any other old timers out there just reading? Let's have some laughs say hello.

<The counterpoint seems to be: "Well, but it is safer." How can that be?>

To me, the faith in Buffett and BRK carried me through three times of 50% off in the market and BRK while almost 100% invested; if I had invested in S&P, not sure I would not have lost sleep and sold.

Welcome back, Divi!

Right in time, with Berkshire sinking and S&P rising.
Clearly better timing then if you had posted beginning of the year when it was the other way around.
Pure coincidence of course.

At least I welcome you coming back, as your posts are not political, bitter or angry, just pure entertainment 😊

Welcome back, Divi!

Right in time, with Berkshire sinking and S&P rising.

BRKB briefly bottomed out at $459 back on Aug 4th.

Divi posted August 4th, 5th, and 6th.

Another coincidence!

I remember so many of you telling me through the years that TSLA is going bankrupt and AMZN is a Ponzi scheme.

A generation now has retired in luxury, funded healthcare and education for kids and grand kids and is travelling in luxury now.

How sweet it is.

Meanwhile, you all keep on upvoting each other waiting for doomsday. This is no way to live.

i hope so. I was a buyer yesterday.....

hello.... was buying yesterday...

This is no way to live.

But it is a way to survive.

https://totalrealreturns.com/s/SPY,BRK-B#:~:text=N...

<<This is no way to live.

But it is a way to survive.>>




Sure is….Random thought…

I’ve never heard anyone reference “opportunity cost” in a bear market.

Not even once.

Liquidity, like fresh air, is the only thing that matters…when you need it.

I’ve never heard anyone reference “opportunity cost” in a bear market.

You guys wish and pray for "doom and gloom" in every post and upvote each other.

Meanwhile TSLA has gone from $50B to $1.5T. 30x returns. AMZN even more.
Innovation happens, society moves forward.

Endless discussions from several years ago when he was relentlessly buying OXY. Disaster.

Berkshire has trounced the S&P 500 for every period over 5 years at little risk to capital.

You tend to show up during short periods of underperformance relative to the S&P, and disappear when the inevitable crash occurs.

Just curious, which of your tech bets has crashed and burned?

Berkshire has trounced the S&P 500 for every period over 5 years at little risk to capital.

Have a play with this chart. Set the length to 1260 days (5 years) and move the slider.

https://stockcharts.com/freecharts/perf.php?SPY,BR...

You'll see Berkshire hasn't always trounced the S&P500 over 5-year periods. It is doing right now.

Related: the retained earnings test:
https://rationalwalk.com/berkshire-hathaways-retai...

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